What is the new, networked economy all about? What are “information goods” and how do they differ from traditional goods? How are online businesses different from brick-and-mortar establishments? Is the large firm with its centralized managerial hierarchy obsolete, to be replaced by decentralized, disaggregated, peer-to-peer communities? Is government regulation needed to keep digital markets free, fair, and open? More generally, does the new economy call for a new kind of economics, or is traditional economics still useful?
This course suggests answers to these and related questions, focusing on recent examples, applications, and illustrations, while grounding the discussion on basic economic principles. We begin by studying the growth of the Internet, wireless communication networks, and related technologies, trying to assess just how widely information technology has diffused throughout the economy. We then explore how these changes in technology, along with changes in regulation and global competition, have affected firm boundaries, competition, human resource management, regulation, sources of financing, and the assignment of property rights.
Here is Professor Peter Klein on this course:
The economy is now a networked economy. “Information goods” are becoming more important than traditional goods. Online businesses are a more substantial driving force than brick-and-mortar establishments. Some people even say that in this networked world centralized managerial hierarchies are obsolete; in the future, they will be replaced by decentralized, disaggregated, peer-to-peer communities.
These are all common claims. How can we make scientific sense of them and explain them with economic theory? Is government regulation needed to keep digital markets free, fair, and open? More generally, does the new economy call for a new kind of economics, or is traditional economics still useful?
My answer to all of these questions is bound up with an Austrian perspective: here we find the tools to analyze and understand what is going on.
I’m teaching a course in the Mises Academy that brings an Austrian perspective to these issues, focusing on recent examples, applications, and illustrations while grounding the discussion on basic economic principles. From my point of view, the Austrian paradigm allows us to separate the marvelous realities of the networked economy from the fallacies being spread by pop futurists.
We will begin with an overview of the “new economy.” What is the economic impact of the web, inexpensive global wireless communication, social networks, and the like? Do they constitute new forms of competition, social interaction, community, and even a new kind of “democracy” itself? How have these changes in technology, along with changes in regulation and global competition, affected firm boundaries, competition, human-resource management, regulation, sources of financing, and the assignment of property rights?
We will then turn next to a series of specific applications for in-depth analysis, looking at information goods, network effects and path dependence, the economics of the internet (and of networks more broadly), and the legal, regulatory, and public-policy implications of networks and information technology. Throughout, we will ask to what extent economic theory — in particular, the economics of the Austrian school — can help us understand these issues and phenomena. One of our main themes will be that what appears to be new, on the surface, may not be as new as it seems! This is the first-ever online course using an Austrian perspective to explore the economics of the online world.
Course outline:
Week 1: The World Is Changing. Or Is It?
Readings:
- Carl Shapiro and Hal R. Varian, “The Information Economy,” in Information Rules: A Strategic Guide to the Network Economy (Cambridge, Mass.: Harvard University Press, 1998).
- Council of Economic Advisers, “The Creation and Diffusion of the New Economy,” pp. 95–120 in Economic Report of the President (Washington: US Government Printing Office, 2001).
- Yochai Benkler, “Introduction: A Moment of Opportunity and Challenge,” in The Wealth of Networks: How Social Production Transforms Markets and Freedom (New Haven: Yale University Press, 2007).
- Peter G. Klein, Review of Benkler, The Independent Review 13, no. 3 (Winter 2009).
- Kevin Kelly, “New Rules for the New Economy,” Wired, September 1997.
- Hal R. Varian, “A New Economy With No New Economics,” New York Times, January 17, 2002.
Week 2: Information Goods
Readings:
- Hal R. Varian, “Markets for Information Goods,” manuscript, April 1998.
- “Knowledge Is Power,” The Economist, September 21, 2000.
Week 3: Network Effects
Readings:
- Stanley J. Liebowitz and Stephen G. Margolis, “Network Externality,” New Palgrave Dictionary of Economics and the Law (London: MacMillan, 1998).
- Douglass Puffert, “Path Dependence,” EH.Net Encyclopedia of Economic and Business History, 2010.
Week 4: Economics of the Internet
Readings:
- Peter G. Klein, “Government Did Invent the Internet, But the Market Made It Glorious,”Mises Daily, June 12, 2006.
- Nicholas Economides, “The Economics of the Internet,” in Steven N. Durlauf and Lawrence E. Blume, eds., The New Palgrave Dictionary of Economics, second edition (London: Palgrave Macmillan, 2008).
Week 5: Intellectual Property, Regulation, and Public Policy
Readings:
- Murray N. Rothbard, “Patents and Copyrights,” pp. 745–54 in Man, Economy, and State with Power and Market(Mises Institute, 2004).
- Stephan Kinsella, “The Case Against IP: A Concise Guide.”Mises Daily, September 4, 2009.
- Thomas M. Jorde and David J. Teece, “Innovation, Dynamic Competition, and Antitrust Policy,” Regulation13, no. 3 (Fall 1990).
- Robert Hahn and Scott Wallsten, “The Economics of Net Neutrality,” Economist’s Voice, June 2006.
The course features 5 weekly lectures, forums, online readings and media, and much more. Students have an option to take the course without receiving a grade. All materials are provided online and for free.
Live Sessions:
The lectures are broadcast live over the internet, and students will receive a special access code to join the sessions. Students will be able to ask the professor questions via email or chat, and the professor will respond via video. The weekly live video-broadcast lectures will be Wednesdays at 8:00 pm EST. Live attendance is not required; recordings of all live sessions will be made available to students.
What is it like to take an online class from the Mises Academy?
Just ask student Lee Sutterfield:
This is the most useful and well presented educational experience I’ve had in my 59 years. I will be enrolled in at least one or two courses for the rest of my life if possible. Keep the courses coming! I plan to complete the equivalent of a Master’s Degree in Austrian Economics if the Academy is able to offer enough material. I hope accreditation is planned but if not, so be it. The material is fundamental and answers many questions I’ve wrestled with for years. Thanks to all of you who have worked so hard over the years to make this happen!!!”
Refund Policy
If you drop the course during its first week (7 calendar days), you will receive a full refund, minus a $25 processing fee.
If you drop the course during its second week, you will receive a half refund.
No refunds will be granted following the second week.
Computer Requirements
Video Lecture Sessions
Operating System
Mac OS X 10.4 or higher
Windows XP SP2 or higher
Linux
Connection
Broadband 2Mb+
Browser
Safari 2, Internet Explorer 7, Firefox 3.0 or higher
Course Readings, Discussions and Assignments
Operating System
Windows 98 or higher
Mac OS 10.1 or higher
Linux
Connection
56k V.90 modem or higher
Browser
Firefox 3.0 or higher is recommended for both Mac and PC.
Free download: http://www.mozilla.com/firefox
Opera and Safari will not show built-in html editor in Moodle.
Internet Explorer can potentially cause errors.
